Opinion
No. 06-12-00064-CV
07-17-2012
In re: 21ST CENTURY GROUP, LLC
Original Mandamus Proceeding
Before Morriss, C.J., Carter and Moseley, JJ.
Memorandum Opinion by Justice Moseley
MEMORANDUM OPINION
In 2004, 21st Packaging Holding, LP (a limited partnership whose general partner is 21st Century Group, LLC), purchased all of the stock of Paris Packaging, Inc., a corporation in the business of manufacturing cartons and paper goods for the food industry. A few years later, under a company equity plan, several Paris Packaging employees (to whom reference is made collectively as Carver) were granted stock options for the purchase of Paris Packaging, Inc., stock and each executed stock option agreements. The stock option agreements provided that Carver's stock options were only exercisable upon a "change in control" of Paris Packaging, Inc.
Bill Carver, Karl Merkley, Shirley Darnell, Jennifer Waggoner, Steven Dendy, Carol Griggs, Lance Sikes, Hal Niblett, and Kay Maddox.
In 2011, 21st Packaging Holding sold Paris Packaging to the Huhtamaki Corporation for $32,500,000.00. Carver argued that the sale constituted a "change in control," thereby making their stock options exercisable. A dispute arose regarding value of the stock options with the current holders of the stock maintaining that the options were worthless, and the holders of the stock options claiming them to be valued at over $800,000.00.
This disagreement precipitated the filing of a lawsuit by Carver against 21st Century Group , LLC (21st Century) in the District Court of Lamar County, Texas, seeking a declaration of the value of the stock options, as well as a determination of rights and benefits accruing to those holding those stock options. 21st Century moved to transfer venue, arguing that a venue selection clause mandated venue in Dallas County. After a hearing, the trial court denied the motion.
21st Century filed a petition for writ of mandamus, asking this Court to order the trial court to grant its motion to transfer venue on the following grounds: (1) it maintains that Carver agreed to exclusive and mandatory venue in Dallas County; and (2) this case arose from a major transaction, making the venue selection clause enforceable under Section 15.020 of the Texas Civil Practice and Remedies Code.
Pursuant to Rule 52.7 of the Texas Rules of Appellate Procedure, 21st Century elected to file a sworn record in lieu of a certified record. TEX. R. APP. P. 52.7. Although this is permissible, we observe that this particular sworn record was not organized in such a manner as to make it readily intelligible and it was extremely difficult to use. For example, 21st Century's brief frequently refers to Tab A, but the record as provided contains no such Tab A; rather, it contains an Exhibit A with Tabs numbered 1 through 8. This resulted in confusing citations in the applicant's brief, such as, "Rel. Tab A(3), Exh. 2 at 18, incorporated at Tab A(3), Exh. 3 at 7." Further, 21st Century also failed to use these citations in a consistent manner, as the "at #" portion of the citation referred to a paragraph number in one citation, while referring to a page number in others.
We deny 21st Century's petition for writ of mandamus because Carver is not clearly bound by the venue selection clause that 21st Century urges is applicable.
Mandamus generally issues only when the mandamus record establishes (1) a clear abuse of discretion or the violation of a duty imposed by law, and (2) the absence of a clear and adequate remedy at law. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding); see In re Columbia Med. Ctr. of Las Colinas Subsidiary, L.P., 290 S.W.3d 204, 207 (Tex. 2009) (orig. proceeding). However, when a trial court fails to grant a motion to transfer venue pursuant to mandatory venue statutes, mandamus is an available remedy and the relator is not required to show the lack of an adequate remedy by appeal. TEX. CIV. PRAC. & REM. CODE ANN. § 15.0642 (West 2002); In re Transcontinental Realty Investors, Inc., 271 S.W.3d 270, 271 (Tex. 2008); In re Mo. Pac. R.R. Co., 998 S.W.2d 212, 215-16 (Tex. 1999) (orig. proceeding).
Section 15.0642 of the Texas Civil Practice and Remedies Code provides for mandamus relief to enforce "the mandatory venue provisions of this chapter." TEX. CIV. PRAC. & REM. CODE ANN. § 15.0642. Section 15.020, in relevant part, states that in the case of a major transaction, contractual venue selection clauses are enforceable if the action arises from the transaction. TEX. CIV. PRAC. & REM. CODE ANN. § 15.020 (West Supp. 2011). "Major transaction" is defined as:
a transaction evidenced by a written agreement under which a person pays or receives, or is obligated to pay or entitled to receive, consideration with an aggregate stated value equal to or greater than $1 million.TEX. CIV. PRAC. & REM. CODE ANN. § 15.020(a).
In this case, 21st Century contends that Carver is contractually bound by a mandatory venue selection clause, that the purchase of Paris Packaging amounts to a major transaction, and that Carver's suit against it arose from that major transaction.
In its first point of error, 21st Century contends that the trial court abused its discretion by denying its motion to transfer venue, maintaining that Carver "agreed to exclusive and mandatory venue in Dallas County."
There are three relevant documents in this case: the Stock Incentive Plan (the Plan); the Stock Option Agreement (the Option Agreement); and the Stockholder's Agreement. We must construe the meaning of these documents in order to determine whether the trial court acted within its discretion. In construing a written contract, our primary concern is to ascertain the true intentions of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To achieve this objective, we should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Id. We presume that the parties to a contract intend every clause to have some effect, and we give terms their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). Unless the contract is ambiguous, the court will enforce it as written. Id. A court may not rewrite the parties' contract or add to its language under the guise of interpretation. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003).
21st Century refers to the three documents, collectively, as "the Equity Plan Documents," and contends that the three documents are "an integrated agreement." In support of its position, 21st Century cites a document entitled "Summary of Terms." However, by its own terms, the summary is neither a binding agreement, nor does it state that the three documents in this case are an integrated agreement. The summary states, in relevant part, "[t]his term sheet is for illustrative purposes and does not constitute a contract and is not binding on, or enforceable by, any person. This term sheet is qualified in its entirety by reference to the [three] documents described herein . . . ."
The Stockholder's Agreement states, in relevant part:
Any action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall only be brought in any federal court or any state court
situated or located in Dallas County, Texas, and each party consents to the jurisdiction and venue of such courts (and of the appropriate appellate courts therefrom) in any such action, suit or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such, action, suit or proceeding in any such court or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
The Plan states, in relevant part:
Any Awards, including Option and Restricted Stock Awards granted under this Plan are subject to additional terms relating to Common Stock of the Company as set forth in a Stockholders [sic] Agreement. The Board may also require that Plan Participants acknowledge in writing that the terms of such Participants [sic] Awards under the Plan are subject to the Stockholders [sic] Agreement.
The Stock Option Agreement states, in relevant part:
The terms and provisions of the Plan are incorporated herein by reference, and Optionee hereby acknowledges receiving a copy of the Plan. In the event of a conflict or inconsistency between the terms and provisions of the Plan (other than such terms and provisions that are discretionary) and the provisions of this Agreement, the Plan shall govern and control.
Here, it is undisputed that Carver executed the Option Agreement, but did not execute the Stockholder's Agreement. Although the Option Agreement does not contain an explicit venue selection clause, it does incorporate by reference the terms and provisions of the Plan.
In short, 21st Century contends that the venue selection clause is applicable and enforceable because (1) Carver executed the Option Agreement, (2) the Option Agreement incorporated the Plan, (3) the Plan incorporated the Stockholder's Agreement, and (4) the Stockholder's Agreement includes the mandatory venue clause. However, the documents' language is not so unambiguous as to mandate that conclusion.
While the Option Agreement clearly incorporated the terms and provisions of the Plan by reference, the Plan did not similarly incorporate by reference the terms of the Stockholder's Agreement. The Plan states that any option awarded under the Plan is "subject to additional terms relating to Common Stock . . . as set forth in a Stockholders [sic] Agreement" and that the "Board may also require that Plan Participants" (such as Carver), "acknowledge in writing that the terms of" their options "are subject to the Stockholders [sic] Agreement." However, the Plan neither expressly stated precisely which of the "additional terms" in the Stockholder's Agreement are applicable, nor is there evidence in the record that Carver was required to (or actually did) acknowledge that the options are subject to the terms of the Stockholder's Agreement.
Another provision of the Plan states that upon the exercise of an option, "or such other time requested by the Committee," each Participant shall sign an instrument . . . [wherein] Participant agrees to be bound by the terms and conditions of the . . . Stockholders [sic] Agreement, as it is applicable to" them. There is no evidence in the record that the stock options were either required to be bound by or acknowledged and responsible to abide by the Stockholder's Agreement.
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Because the record before us does not definitively establish that the venue selection clause in the Stockholder's Agreement is applicable to Carver, we are unable to find a clear abuse of discretion in the trial court's refusal to transfer venue. Therefore, we need not address whether Carver's underlying suit against 21st Century arose from a major transaction as defined in the Texas Civil Practice and Remedies Code.
For the foregoing reasons, we deny the petition for writ of mandamus.
Bailey C. Moseley
Justice